Your friends have more friends than you do…

Ever wondered why is it that most of us feel that our friends might have more friends than we do?

Sociologist Scott Feld in a very interesting paper written way back in the 1970s presents to us the logic. The paper lays the foundation of what is called the “class size paradox” which speaks of the variability in class sizes and the affect that the mean of these classes can have on individuals’ perception.

So what this means is that, if you quote an average about some phenomenon which applies to a very large set, say via surveys or polls and even though you end up structuring the survey/poll in such a way that you feel it might be representative (say via geographies or interest or company size etc), but don’t take into account the context in which your respondents exist, the final results might not give you an accurate picture of what the reality actually is.

As marketing guru Seth Godin says “Discernment is the hardest part of marketing — seeing the world as it is, instead of how you experience it.”

One sees it all the time. For example, when our customers ask us “Hey, what’s the average salary for a UI developer, we need it to benchmark our salaries?”, we can’t just give them a number. We have to ensure that we mention stuff like for a UI developers that have spent time in companies like A, B, C (of which company B has a salary range similar to yours) have a salary range of XXX. Now you might notice that these 10 companies pay 2x of these, but they account for only 50 UI developers in total.

The class paradox comes into play because in general conversations, these 50 folks, would know another 1000 folks (assuming their colleagues, as well as folks who applied and didn’t get through and so on and so forth), and so now we’ve got a 1000 people saying that the average salary of a UI developer is 2x of what the average actually is.

I wonder if the sudden spike in salaries that we noticed in the last 24 months in the Indian tech/startup industry was a result of something like this, where a couple of companies started paying much more than what the market “expected” and all the other companies followed suit because they thought that was what the market reality is.

The paper itself is a tiny bit mathematical in nature, however, it is fairly simple math and illustrated well using networks.